Nav Nirman (P.) Ltd. vs Commissioner of Income Tax

G.G. Sohani, Actg. C.J.

By this reference u/s 256(1) of the income tax Act, 1961 (''the Act''), the Tribunal, Indore Bench, has referred the following question of law to this Court for its opinion: Whether, on the facts and in the circumstances of the case, the conclusion reached by the Appellate Tribunal that there is no rectifiable mistake and much less an apparent mistake in its order dated November 7, 1978, as a result of the Madhya Pradesh High Court decision in Commissioner of Income Tax Vs. Jaora Oil Mill, , subsequently given on the similar point in issue, was correct in law?

The material facts giving rise to this reference, briefly, are as follows: For the assessment year 1971-72, the assessee filed a return showing a net loss of Rs. 73,886. The ITO, however, computed the net loss at Rs. 32,519. The ITO held that the assessee had concealed the particulars of income and penalty proceedings were, therefore, initiated against the assessee u/s 271(1)(c) of the Act. After taking into consideration the explanation of the assessee, the ITO held that as the assessee had concealed the particulars of its income to the extent of Rs. 13,000, the minimum penalty leviable was Rs. 13,000. The ITO accordingly levied the minimum penalty of Rs. 13,000 on the assessee. Aggrieved by that order, the assessee preferred an appeal before the AAC who dismissed the appeal. On further appeal before the Tribunal, the order passed by the ITO levying penalty was upheld and the appeal was dismissed. Thereafter, the assessee submitted an application before the Tribunal for rectification. The contention urged on behalf of the assessee was that in view of the decision of this Court in Commissioner of Income Tax Vs. Jaora Oil Mill, which was decided subsequent to the decision of the Tribunal, the order passed by the Tribunal deserved to be rectified as there was a mistake apparent on the face of the record. This contention was not upheld by the Tribunal and it was held that there was no mistake or error apparent from the record. The Tribunal, therefore, rejected the application for rectification. Aggrieved by the order passed by the Tribunal, the assessee sought reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.

Shri Nema, the learned counsel for the assessee, contended that as a result of the decision of this Court in Jaora Oil Mill''s case (supra), no penalty was leviable on the assessee as the ITO had not determined any income of the assessee exigible to tax for the assessment year in question. The learned counsel for the assessee contended that though the decision in Jaora Oil Mill''s case (supra) was delivered subsequent to the order passed by the Tribunal, the order passed by the Tribunal deserved to be rectified u/s 154 of the Act. Reliance was placed on the decisions in Parshuram Potterv Works Co. Ltd. Vs. D.R. Trivedi, Wealth Tax Officer, Morvi and Another, Mettur Chemical and Industrial Corporation Ltd. Vs. Commissioner of Income Tax, and CIT v. Mohan Lal Kansal [1978] 114 ITR 583 (Punj. & Har.).

In reply, it was contended on behalf of the department that the Tribunal had rightly come to the conclusion that there was no mistake or error apparent on the record and that no case for rectification was made out.

It was conceded by the learned counsel for the parties that the question referred by the Tribunal does not bring out the real issue between the parties. We, therefore, reframe that question as follows:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no case for rectification in the light of the decision in Commissioner of Income Tax Vs. Jaora Oil Mill, ?

Before we proceed to appreciate the contention advanced on behalf of the parties, it would be useful to refer to the decision in Jaora Oil Mill''s case (supra). In Jaora Oil Mill''s case (supra), the facts were these: The assessee returned a loss of Rs. 2 lakhs. On the assessee''s failure to produce the books of account, the ITO completed the assessment u/s 144 of the Act and computed the total income of the assessee at Rs. 50,000. The IAC held that inasmuch as the assessee had shown loss at Rs. 2 lakhs, but the income was computed at Rs. 50,000, the entire sum of Rs. 2,50,000 was the concealed income of the assessee and penalty of Rs. 2,50,000 was accordingly levied on the assessee. On appeal, the Tribunal held that the income concealed was the income actually determined, i.e., Rs. 50,000 and the penalty was accordingly reduced to Rs. 50,000. The view taken by the Tribunal was upheld by this Court and it was held that on the facts and in the circumstances of that case, the concealed income was Rs. 50,000 only. The learned counsel for the assessee contended that from the decision given in Jaora Oil Mill''s case (supra), it logically followed that unless the ITO had determined any amount as income of the assessee exigible to tax in any assessment year, the provisions of section 271(1)(c) would not be attracted and the Tribunal was, therefore, not justified in upholding the order imposing penalty on the assessee. The contention cannot be upheld. It may be that in the circumstances of a given case, a mistake discovered in an order on the basis of a subsequent judgment of the High Court may be a mistake apparent on the record and a ground for rectification. The subsequent decision of the High Court should, however, in such cases, be directly in point. As held by the Supreme Court in State of Orissa v. Sudhansu Sekhar Misra AIR 1963 SC 647, a decision is only an authority for what it actually decides and what is of the essence in a decision is its ratio and not what logically follows from the various observations made in it. Now, in Jaora Oil Mill''s case (supra), it was found that the concealed income was Rs. 50,000 only and in these circumstances, it was held that the Tribunal was right in imposing penalty of Rs. 50,000. In the instant case, the ITO has found that the assessee had concealed the particulars of its income to the extent of Rs. 13,000. This finding was upheld by the Tribunal. In view of this finding, it cannot be held that there is a mistake apparent on the record in the light of the decision in Jaora Oil Mill''s case (supra) and hence the order of the Tribunal deserved to be rectified. In our opinion, therefore, the Tribunal was justified in holding that there was no case for rectification.

Our answer to the question framed by us is in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.